1993 (3) TMI 116 - HC - Central Excise

Issues Involved:
1. Rejection of refund claims due to limitation.
2. Entitlement to trade discounts.
3. Entitlement to deductions for interest on bank facilities.
4. Entitlement to deductions for marketing and distribution expenses.
5. Entitlement to cash discount.

Issue-wise Detailed Analysis:

1. Rejection of Refund Claims Due to Limitation:
The petitioners challenged the rejection of eight refund claims amounting to Rs. 90,17,762.05 for the period from 1st July, 1977 to 10th February, 1981, on the ground of limitation under Rule 11 read with Rule 173J of the Central Excise Rules, 1944, and Section 11B of the Act, 1944. The court found merit in the petitioners' contention that the Assistant Collector was directed by a format Order dated 13th December, 1983, to decide the claims on merits in light of the Supreme Court's judgment in the Bombay Tyres case, not on the ground of limitation. Consequently, the court set aside the Order No. V(68)18-154/80/1933 dated 19th March, 1984, and remanded the matter back to the Assistant Collector to decide the refund claims on merits within 12 weeks, allowing the Assistant Collector to call for further particulars if necessary.

2. Entitlement to Trade Discounts:
The petitioners' claims for various trade discounts, including Quantity discount, Festival discount, Incentive discount, and Over-riding discount, were rejected by the Assistant Collector due to lack of supporting agreements or contracts and insufficient clarification. The court agreed with the Assistant Collector's findings, noting that the petitioners failed to provide necessary particulars despite being given the opportunity. The court emphasized that the nature of trade discounts must be examined by the Assessing Authority, requiring details such as the percentage of discount, eligibility, and quantities involved. The petitioners' reliance on a Circular dated 23rd June, 1981, was also dismissed as it indicated that the discounts were not known at the time of removal of goods.

3. Entitlement to Deductions for Interest on Bank Facilities:
The Assistant Collector rejected the petitioners' claims for deductions under the head of interest on bank facilities, citing the Supreme Court's judgment in the Bombay Tyres case. The court upheld this decision, noting that the petitioners failed to provide particulars regarding the type and nature of bank facilities enjoyed. The court reiterated the Supreme Court's ruling that expenses incurred up to the date of delivery, including interest on inventories, cannot be claimed as deductions.

4. Entitlement to Deductions for Marketing and Distribution Expenses:
Similar to the interest on bank facilities, the petitioners' claims for deductions under marketing and distribution expenses were rejected by the Assistant Collector based on the Supreme Court's judgment in the Bombay Tyres case. The court found no merit in the petitioners' argument that these deductions could be implied from the judgment, as they failed to furnish necessary particulars. The court upheld the Assistant Collector's decision, reiterating the Supreme Court's clear stance on such expenses not being deductible.

5. Entitlement to Cash Discount:
The court found merit in the petitioners' claim for a cash discount at the rate of 5% for down payment, noting that the petitioners submitted approximately 800 invoices supporting their claim. The Assistant Collector had granted cash discounts at varying percentages (1.25% to 1.52%) but not at the claimed 5%. The court directed the Assistant Collector to grant the rebate at the rate of 5% for cash discounts, referencing the judgment in Jenson & Nicholson v. Union of India, which established that cash discounts must be allowed as mentioned in the Price List, irrespective of actual availing by customers.

Conclusion:
(i) The court set aside Order No. V(68)18-154/80/1933 dated 19th March, 1984, and directed the Assistant Collector to dispose of the eight refund applications for the period 1st July, 1977 to 10th February, 1981, on merits within 12 weeks, allowing for further particulars if necessary.
(ii) Regarding Order No. C. EX. 6/WP/59/91/PL/1941 dated 19th March, 1984, the court granted the petitioners relief only for the cash discount at the rate of 5%, directing the Assistant Collector to decide the refund within 12 weeks.

Disposition:
The Writ Petition was disposed of with no order as to costs.

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